FTC Recommends Privacy Legislation

Internet industry groups have long been pushing for self-regulation of Web commerce and privacy, but the Federal Trade Commission, after determining that self-regulation has been inadequate, has recommended that Congress pass legislation to protect consumer privacy.

The Commission based its recommendations on a survey of the most-visited sites on the Internet, which found that only 20 percent have implemented all of the privacy practices that the commission feels are necessary.

“While the Commission applauds the efforts by the private sector to address the issue of online privacy, the survey results show that such efforts have not been enough,” said Robert Pitofsky, chairman of the FTC.

“As this year’s survey makes clear, the number of Web sites meeting basic standards of privacy protection is far too low, endangering consumer confidence in this fast-growing, pro-consumer marketplace.”

Internet industry groups and Internet marketers, though, are highlighting the positive points in the FTC’s survey of Internet privacy practices, and saying that legislation is unwarranted.

The battle is largely one in which the libertarian views of the industry, which hold that regulation stifles growth and innovation, confront the consumer protection stance of the FTC and privacy advocates.

“Every week some company announces a new technology that improves our ability to protect privacy online,” said Wally Snyder, president and chief executive officer of the American Advertising Federation.

“Why would anyone want to stifle that process through legislation that knocks the air out of the marketplace?”

The Direct Marketing Association also chimed in with its objections to new legislation, saying Congress is already working to protect children, financial information, and medical data.

“Any attempt to measure all Web sites by one uniform yardstick illustrates an inability to gauge a dynamic marketplace,” said Jerry Cerasale, senior vice president of government affairs for the DMA.

“All information is not the same and can not be measured equally. In our society where freedom of information is cherished, we should rightly look to where data collection and usage benefits consumers, and where data usage harms consumers. The focus of government must be on preventing real harm, and letting the marketplace extend benefits to consumers unimpeded.”

Privacy groups praised the FTC recommendation, saying it was time for government to step in.

“The Federal government has finally started to abandon the unsupportable fiction that companies will voluntarily protect consumer privacy to the level consumers want,” said Jason Catlett, president of Junkbusters.

“The next step is for Congress to guarantee people the rights they need to protect their privacy.”

The FTC recommendation asked Congress to pass legislation guaranteeing that consumer-oriented commercial Web sites abide by standards of practice for information collection online. The commission said that these sites must give consumers notice about the information collection, give them a choice, give them access to their information, and keep that data secure.

There was dissent, even among those in the panel that came up with the recommendation. Two of five commissioners disagreed with at least part of the report.

“Legislation should be reserved for problems that the market cannot fix on its own and should not be adopted without consideration of the problems legislation may create by, for example, imposing costs or other unintended consequences that could severely stifle the thriving New Economy,” said commissioner Orson Swindle.

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